In the past few days, OPEC decided to push more remarks and statements to the market, sending a clear message that the time has come to discuss a possible extension of December’s deal.
OPEC noted that there is a high possibility to discuss such decision in OPEC’s next meeting in June, in order to grant stable prices in the near future.
Does This Matter?
As we noted many times in our previous reports, remarks, statements or comments by either OPEC or Non-OPEC members does not matter anymore.
Crude Oil prices have reached a situation where such remarks are not enough to push the prices higher like what happened last year, when the prices spiked more than 100% on the estimates of a possible deal “soon” despite the fact that the deal has been reached after 11 months from the first statement by OPEC.
Despite the fact that crude oil has stabilized above key supports since the beginning of the week. Yet, this does not mean that the remarks will push the prices higher again.
Crude Oil needs actions and decisions but not remarks, statements or comments by any of the members.
Brent Well Supported By $50 Barrier
For the past two weeks, Brent Crude has been supported well above $50 barrier, which remains solid until this report is released. Every time it declines near that support, it jumps right away, as there are huge stop orders are reported below that key support.
From a technical analysis point of view, Brent Crude is also supported by its 200 DAY MA, which held strongly since November of last year, with no clear breakthrough that support as of yet.
Moreover, looking at the daily chart, Brent Crude jumped right from its 50% Fibonacci retracement from the recent rally (43.49 low to 58.31 high) as shown on the chart.
The recent rally back to $52 areas is still considered as a short term bounce, as the possibility is still there for a deeper decline to its 61.8% Fibo retracement which stands at 49.15.
Yet, the technical indicators are heavily oversold and crossed over to the upside, which means that an upside rally is more likely before the downtrend resumes.
However, any upside rally is likely to remain limited below $52.50 resistance area.
WTI Bounced Off Its 61.8% Fibo
WTI has a little bit of a different story, as it already broke through its 200 DAY MA and traded more than two weeks below that solid support.
Moreover, the decline continued all the way to its 61.8% Fibo retracement as shown on the chart, and since then, it has been trading within a tight range until this report is released.
Such bounce keeps the hopes higher for a period of stabilization, especially that the technical indicators has crossed over to the upside again, which lean toward the possibility for some gains ahead.
Yet, WTI Crude needs to break above its 200 DAY MA first in order to rant more gains. Otherwise, further declines remain highly possible.
US Crude Oil Inventories Ahead
During the US Session ahead, all eyes will be on the US Crude Oil inventories figures, which set to have a notable impact on the market today.
The estimates point to a surplus of 1.2M barrels last week, after rising by 5.0M barrels the week before, which would be the second weekly increase in inventories in a row.
Such figures should keep the pressure alive on the prices. However, traders should not over react and chase the moves. Especially that both Brent and WTI are trading at key support areas.